Alpha Insurance Liquidation and Structural Warranties: Is your Home still Covered?

by Sofia Delgado
25th May 2018

Following the news that Alpha Insurance A/S had declared bankruptcy, thousands of policy holders in the UK rushed to find answers. But many – including some self builders – are unaware that they might be affected.

The company offered insurance policies across the board through various UK brokers. Many taxi drivers, for instance, were left without cover last week and urged to arrange new policies to continue working.

Self builders have also started to ask whether their structural warranties are still in place. We’ve put together what you need to know to make sure your home investment continues to be safe.

What does my structural warranty cover?

A structural warranty will generally last 10 years after completion of your build and is there to help you solve any structural issues with your new home.

Policies cover the cost of complete or partial rebuilding of your new home should it suffer damage caused by defects in the design, workmanship, materials or components of the building’s waterproof envelope and drainage system – as well as elements such as faults in new chimneys and flues that could pose a threat to the health and safety of the occupants.

Structural warranties generally require technical inspections at key stages of your build to check that every part of the project is up to standard, therefore minimising the risk of structural damage further down the line.

Read more: Quick Guide to Structural Warranties

Why is Alpha’s insolvency relevant to me?

Alpha Insurance A/S has provided a range of insurance policies across the UK, such as professional indemnity, motor and gap insurance, and home insurance.

Many homeowners who have taken structural warranties through brokers may be unaware that they are Alpha policy holders.

David Sumner, from Advantage Home Construction Insurance, said: “Much has been reported on the knock-off effect of Alpha going bust.

“However, what hasn’t been highlighted is the impact this will have on thousands of new homes owners. Information is starting to filter through, but unfortunately many policy holders will have to take out fresh insurance, which is an unwelcomed and unexpected blow

“We need urgent action to ensure that those who are affected are informed.”

Structural warranties offer cover for new builds to protect from defects in the design, workmanship or materials
Insurers are likely to carry out checks at key stages of the build

How do I know if I’m still covered after Alpha’s insolvency?

Self-builders who suspect their structural warranty was covered by Alpha should contact their insurer or broker for clarification.

Paul Kempton, Managing Director of the Sennocke Group – owner of Build-Zone – said: “If you have a Structural Warranty Policy or correspondence regarding it, then you should be able to find a Certificate of Insurance, which will tell you the name of the insurer.”

According to Mr Kempton, a significant issue with Alpha is that the Financial Services Compensation Scheme (FSCS) will only cover up to 90% of any claim now that it has gone bust – and not in all circumstances.

He added: “The other, more serious, problem is that any rights that you have to make a claim under the FSCS do not transfer to any new owner of the house. If you wish to sell, you may need to purchase a new warranty, sometimes called a completed housing or retrospective warranty, which attracts a higher premium than that which you would have been originally charged.

“Another point is that some lenders will not accept retrospective warranties”

Owners could also incur high survey costs to establish the condition of the building before a new insurer agrees to offer cover.

I have taken a structural warranty with Alpha insurance. What do I do?

The Financial Conduct Authority (FCA), the UK regulator for financial firms and financial markets operating in the country, has urged Alpha policyholders to find alternative insurance immediately.

The UK regulator has published guidance on their website that existing Alpha insurance policyholders should contact their broker in order to find alternative policies. According to the FCA, it’s possible that the Danish Guarantee Fund may cover some existing policies, primarily for policyholders with private insurance, until 5 June 2018.

Claims after 5 June may not covered by the Guarantee Fund, and it is unclear whether the Financial Services Compensation Scheme (FSCS) would provide cover after the date and which policies will be covered by any of the regulators.

In 2015, structural defects insurance provider CRL announced it had incorporated Alpha into its policies. Build It has contacted the company to ask what steps it is taking after Alpha’s collapse and whether its customers remain covered.

CRL told Build It that “Alpha Policyholders do not need to do anything at present.”

The firm announced it has been in extensive dialogue with UK and Danish financial authorities to seek guidance regarding their customer’s protection.

“We are pleased to report that significant progress has been made in clarifying the position for existing Alpha Home Warranty Policyholders. That view is that Alpha Policyholders remain in cover, protected by UK and/or Danish guarantee funds, according to assurance given to us by these authorities,” said CRL.

CRL also states it is working towards finding insurers who could offer alternative cover for homeowners with Alpha policies. It is unclear whether securing this alternative cover would incur extra costs for homeowners.

You can read the CRL statement sent to Build It in full below:

23/05/18 CRL statement in relation to the bankruptcy of Alpha Insurance

CRL Management and its Principal BCR Legal Group have been in extensive dialogue with all the parties involved with the bankruptcy of Alpha Insurance. We are pleased to report that significant progress has been made in clarifying the position for existing Alpha Home Warranty Policyholders. That view is that Alpha Policyholders remain in cover, protected by UK and / or Danish guarantee funds, according to assurance given to us by these authorities. However the position is still being reviewed and further updates are expected shortly.

While we welcome the common-sense position being adopted by the various regulators and guarantee funds we have also been busy preparing alternatives for our customers, should that represent a better outcome. To that end we have been in discussions with representatives of an insurer prepared to look at offering replacement cover for the Alpha policies. In a handful of cases with special requirements we have already arranged replacement cover for existing customers.

On the basis of the assurances given to us, our position is that Alpha policyholders do not need to anything at present. If however they do require more information they can contact us on [email protected] or visit our website at

We will be writing to all policyholders in due course with a full update on how their warranties will operate going forward.

Structural warranties' checks help self builders secure mortgages
Self builders should call their structural warranty provider

My self build is still under construction. Should I take action?

According to Mr Kempton, seeking an alternative policy should be a priority for self builders.

“They should also arrange for an alternative policy, making sure they only use A-rated insurers through professionals who understand the market. And take the opportunity to investigate the brokers, their offering, past record and history.”

Mr Sumner offers some advice for those looking to secure a warranty: “Unfortunately, the quality of cover provided differs widely in the industry and often homeowners have no idea who their policies are placed with or the rating of their carrier.

“I would urge any self builder or property developer to do their research and ensure they go with a broker who uses specific sector-experienced carriers as an absolute minimum.”

What does the Financial Services Compensation Scheme (FSCS) say?

The FSCS is an independent body that protects UK consumers when financial services firms go bust by offering compensation. The FSCS deals with claims against firms authorised by the Financial Conduct Authority or the Prudential Regulation Authority.

While no official statement regarding blanket cover for Alpha policy holders has been released, according to the FSCS website, the majority of UK customers should be covered if they had an insurance claim or if they are entitled to a return of part of the premium that they paid for their policy.

The FSCS has said it is seeking to reach agreements with the Danish Insurance Guarantee Fund to define how claims can be processed and to what extent Alpha policy holders are protected by either body.

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